We closed out 2017 after fighting successfully to remove the most damning provisions for clean energy from the tax bill. With that bill now law, we will need the rest of this year and, perhaps, several more, to figure out how the new tax code will impact innovative industries.

With the tax bill off Congress’s docket, we expect legislators to turn their attention to other must-pass issues including a budget deal (current funding expires on the 19th), the debt ceiling, and an agreement on immigrants impacted by the President’s decision to remove protections known Deferred Action for Childhood Arrivals (DACA). The President’s top goal for 2018 is infrastructure, a potential $1 Trillion in federal, state, and private sector partnership programs. Sub-sectors like microgrids, cyber technologies, artificial intelligence and robotics, agriculture innovation, energy storage, and grid infrastructure all stand to gain from such initiatives. There will also be interesting opportunities for companies in the clean energy sector to engage as Congress considers a new Farm Bill, agency appropriations, Defense authorization, and grid modernization and security.

Regulatory policy will also be paramount and of intense focus—both in states and in the wholesale market regulated by the Federal Energy Regulatory Commission. We expect the spirit of the DOE Grid Resilience rulemaking, designed to help “baseload” power plants, not stop at “no” but to continue wending its way through its own and other dockets at FERC. In addition, energy storage and distributed energy resources could have a seat at the table in several pending rulemakings. We will continue to build the record on the benefits of those technologies and applications.

On climate policy, states and regions will remain the leaders, moving ahead in many cases with greenhouse gas reduction implementation and keeping the U.S. in line with its Paris goals, even if the political will has moved away from federal leadership. Don’t expect an economy-wide carbon tax in the U.S., but the chatter will continue and action will start in a few states and other countries to put a price on carbon.

At 38 North Solutions, we will continue to leverage our technical and policy expertise in our bipartisan way, serving as a periscope and pushing the envelope for our clients to ensure that sustainable organizations and businesses can grow with smart public policy.

As the world necessarily transitions to a low emission future to mitigate our impacts on the climate, employment in solar and wind is exploding, generating jobs 2.5 times faster than fossil industries in the US. According to the US Solar Jobs Census, solar jobs increased by over 51,000 workers in 2016, a 25% increase over 2015.

At the same time that renewable energy jobs are increasing, fossil fuel ones are decreasing, according to a report by the International Renewable Energy Agency (IRENA). And, unfortunately, in an economy that places a higher value on solar, wind, energy storage, electric vehicles and countless other forms of innovation, there is not always a match between the loss of coal jobs and the increase in clean energy jobs.

Image: US Energy Information Administration

A dying tradition

“We must remember and honor the fact that our industrial age was built on the backs of coal miners in Appalachia,” says Mary Anne Hitt of the Sierra Club, speaking about her home state of West Virginia, a state in Appalachia that has relied almost exclusively on the coal industry to support their economy and is now suffering disproportionately to other, more economically diverse regions of the US. The Sierra Club released a report that stressed the importance of working with communities historically dependent on the fossil fuel industry for employment through all stages of the transition to clean energy.

So how do we transition the workforce, providing well-paying, sustained employment for workers who find themselves in dying industries? As we dive deeper into the state of West Virginia, we can perhaps apply some of those lessons to other coal-based economies that find themselves and their communities in a similar situation. Based on the experience of Brandon Dennison, founder of the Coalfield Development Corporation in West Virginia, it is not enough to assume that training programmes alone will suffice.

The big five markets

“We must open markets first to ensure that these workers have jobs to go to,” says Dennison. His organization strives to develop workforce and markets intentionally and simultaneously. “You can train a hundred people to be HVAC technicians, but if you only have six of those jobs available, you are still left with unemployed or underemployed workers.”

Coalfield Development Corporation has identified five markets they are creating in West Virginia: sustainable agriculture, green collar construction (including rehabilitation and energy efficiency), solar, mine land reclamation, and entrepreneurship in arts and culture. There is plenty of funding for training programmes, says Dennison, but the key is sustainable job creation for a market that puts wages in pockets and allows people to be empowered to produce for their society.

Dennison and his partners have developed a formula for their development programme, which they call 33-6-3: a weekly schedule of 33 hours of paid work, six hours of community college study, and three hours of life skills. There is a misperception, Dennison says, that the work of coal miners is limited to axes and picks. Most of these miners operate large, complex equipment; these operation and maintenance skills, coupled with the fact that many miners are licensed electricians, can transfer well into the solar industry, for example.

Dennison warns that, as we transition to a low-emission future, we need to be honest about the fact that the coal industry is not coming back. Rather than debating whether the coal industry is good or bad for the environment, we need to speak in economic terms, looking toward investment and business for the future. His organization tries to create more than one type of economic opportunity so that coal communities do not simply shift to depending on another singular opportunity, but have a range of options. “We have to honor the fact that coal has powered our country and that these people should be proud,” concludes Dennison. “It is now time to adapt for the future and a good quality of life.”

Argentina meets Virginia

Another programme with roots in Appalachia is Weatherizers Without Borders(WWB), which started as a partnership between an Argentina-based non-profit, FOVISEE (Foro de Vivienda Sustentabilidad y Energias), and a Virginia-based non-profit, Community Housing Partners – Energy Solutions (CHP ES) in 2012. This programme was patterned after the US Department of Energy’s Weatherization Assistance Program, an energy efficiency programme initiated during the 1970s energy crisis.

WWB began as a grassroots campaign to train a group of a dozen local volunteers in the La Josefa neighborhood of Campana, Argentina – about 70km north of Buenos Aires. Transferring over 40 years of institutional knowledge to an area of the world unfamiliar with weatherization – using low-cost technologies to make homes more energy efficient – has saved the region decades of trial and error, property damage, and even loss of life, according to Chase Counts, utility programs manager of WWB. Counts’ group cooperates with local utilities and municipalities who have an interest in keeping their constituents healthy and safe and creates a positive feedback loop of local jobs, improved public health and funding freed up from utility costs that can be better spent on healthcare, food and local goods.

As the World Economic Forum’s Global Future Council on the Future of Energy seeks to define our energy transition and recommend policies that enable that evolution, we should not lose sight of the human impact of this new economy. We can draw from successful examples such as Coalfield Development Corporation and Weatherization Without Borders to be intentional about bringing all people along and to ensure that economic opportunities and quality of life are sustained.

Appalachia is not the only region that is adversely impacted by a fading industry; other states, regions, and countries should take heed and start modeling these and creating new programmes to ensure all people can benefit from a low emission future. Using the public-private partnership model of the World Economic Forum, we can replicate best practices of these programmes. In our enthusiasm for a new energy economy, we must ensure we do not leave people behind and that, rather, we create opportunities for economic development.

The Trump Administration released today what is known as the “skinny” budget because of the lack of specifics, and, while this is more of a political statement than a political reality, it is clear that any program remotely related to climate or clean energy is recommended for the chopping block. Climate programs like the Global Climate Change Initiative and Green Climate Fund were expected targets, but also eliminated were popular programs like Department of Energy’s flagship ARPA-e initiative; TIGER grants for transportation innovations; the Low Income Home Energy Assistance and Weatherization Assistance Programs that pay for and reduce energy bills for low-income families; and Energy Star whose labels are ubiquitous at appliance retailers. Dozens more are slated for refocus, reduction or elimination.

Members of Congress on both sides of the aisle are saying this is “dead on arrival”, but a concern is that such a high number of programs across all sectors—not just climate and clean energy—are eliminated that it will be impossible to save them all and have the President still sign the final appropriations bills. In fact, the President has a great deal of leverage given that Congressional Republicans are eager to push to his desk both the healthcare repeal and tax reform. Congress, not the President, will pay the price for government inaction and shutdown in the 2018 mid-term elections.

So, what should we do as a community of clean energy and technology advocates and innovators? Since the agencies will be fighting against rather than on behalf of their own programs, it will be the job of Congress and all of us outside the government to stand up for our own federal government. Let’s figure out which programs have strong constituencies that Members of Congress are well-aware of and clearly support. We have to assume many of those will be restored. We find programs that industry has benefitted from and continues to engage in—and put those businesses to work being heard. The challenge will be identifying those programs that fall into the gap—that have clear benefits but not constituencies that can realistically fight for them—leaving them more vulnerable to deep cuts. Those are the programs we should be worrying about and that we will need to be more creative about supporting.

It will be critical to tell success stories, to engage everyone from grassroots to grass-tops and top brass, and to make the case that clean technology is good for the economy and for the transition into well-paying jobs in parts of the country that most need them. The private sector can’t do that alone; the federal government brain trust is crucial to enable research, development, and deployment partnerships that spur innovation and scale technology. Let’s work together to make sure the fiscal haircut does not include decapitation—that in the effort to reduce government spending we do not also diminish U.S. global leadership in clean energy.

The results of this week’s election are certainly a surprise and will impact the focus and direction of policymakers moving forward. As we look ahead, historically, Congress is most active when one party controls the House of Representatives, Senate and White House. We expect 2017 to follow this trend, particularly because Republicans campaigned, in part, on a message of fixing the gridlock that exists in Washington. As a result, the next two years are going to be busy and significant.

The 38 North Solutions team has a proven track record of working with legislators on both sides of the aisle and feels well positioned to help companies and organizations navigate this new period. The weeks and months ahead will clarify where the Trump Administration and Republican Congress will focus their attention, but here are our initial thoughts about what lies ahead:

Lame Duck, 114th Congress
Before the election, the prevailing assumption was that the end of this year (Lame Duck Session) of Congress would be especially busy as members from both parties try to clear the decks of any remaining pieces of legislation before the bipartisan-viewed wildcard of a Trump Administration assumes power. However, the overwhelming nature of Trump’s win, coupled with the fact that Senate and House Republicans performed better than expected, has diminished the appetite amongst Republican members to negotiate with Democrats and President Obama at the end of the year in any significant way. As a result, the opportunity for successful enactment of clean energy provisions like reinsertion of the technologies that were removed from the Investment Tax Credit last year has closed significantly. Funding for the federal government expires on December 9th, so Congress will have to address that before adjourning, but the likelihood that the ITC or any other policy provision gets attached is limited.

Federal Legislation, 115th Congress
With a GOP-controlled House, Senate, and White House, we expect the new President to be able to pass energy legislation that could include PURPA and Federal Power Act reform. We will need to be vigilant to ensure that those provisions are not detrimental to clean energy technologies and applications, while mining opportunities to insert clean energy provisions into non-controversial legislation. There is no realistic scenario for passing a carbon tax, renewable portfolio standard, clean energy standard, or additional clean energy tax credits. In fact, we will need to work hard to shore up support for existing clean energy provisions to ensure that they are not repealed. On the positive side, innovation is key to growing the economy and jobs and we can continue to hammer those messages to energy policy and tax committee leadership. There may also be a path for additional transmission provisions that can increase build-out of infrastructure across the U.S., although we would not expect a large spending provision in any case.

Companies interested in advancing clean energy policy must not view yesterday’s election as an imperative to disengage in advocating before Congress. Rather, moving forward, we know that the Trump Administration has every intention of passing an aggressive legislative agenda next year. It is therefore critical that we continue to make the strongest case possible for policies that will continue to support an innovative energy economy.

Environmental Protection Agency
The Obama Administration’s landmark achievement regulating carbon dioxide emissions from power plants, known as the Clean Power Plan (CPP), is now in serious jeopardy. Because the CPP is a federal regulation, the Trump Administration can undertake steps to undo the policy without seeking congressional approval and we expect taking such action to be a priority. The good news is that the CPP has helped states to think strategically about how to move to a cleaner energy generation mix and investment in those technologies has shifted to support that movement. We believe that utility and corporate investment in clean energy will continue to grow. In addition, regulatory processes on clean energy in states will continue to move forward.

Department of Energy
Funding for specific programs within the agency may shift to more fossil and nuclear research and development funding and less renewables and energy efficiency funding. Less clear is how the Office of Electricity Delivery and Energy Reliability would be impacted, although Trump’s energy agenda includes grid modernization. It is hard to envision the Quadrennial Energy Review process continuing since this was a project led by Secretary Moniz.

Federal Energy Regulatory Commission
FERC is generally not considered political and the two vacancies are slotted for Republicans. We know at least one of those potential appointees and think that other credible nominees would likely come from regulatory and public policy arena. We will need to continue cultivating those relationships to ensure that wholesale markets for innovation will continue to be considered.

While yesterday’s result may not have been what we expected, it is the reality we face moving forward. We would be happy to set-up a time to meet to discuss specifically what the Trump Administration’s ascension may mean for your business and how we can work together to ensure that your interests are being adequately addressed in Washington.

What happens when you bring together nearly two dozen energy leaders from across the globe into a room for several days of uninterrupted discussion on the Future of Electricity? Throw in jet lag for anyone not from United Arab Emirates, add a cocktail of fossil fuel interests along with renewable energy advocates, shake well in nearly 100 degree F heat, and one could not imagine consensus coalescing around almost anything. Surprisingly, perhaps, this group, convened by the World Economic Forum, agreed on a set of trends that indicate change is nigh in the electricity sector:

The world is increasingly electrified.

Renewable energy has the greatest capacity growth.

Clean energy enables growing universal access to electricity.

Energy security increases as a result of more indigenous clean electrification.

Distributed energy resource deployment is significantly increased.

Energy storage provides critical grid services.

Consumer engagement and choice shape future electric growth.

The price of electricity may increase briefly, then decrease, over time.

Regulation supports and accommodates these changes.

This transformation will not happen organically, however. The group also identified requirements to realize this transformation in our electric system:

Politic targets must be clear, transparent, and consistent.

Regulation should anticipate trends and create a climate for investment.

Power markets and platforms must be open for all participants.

Financing mechanisms should be clear and risk factors understood.

Business and monetization models must evolve.

Consumers must be allowed to participate.

Special provisions should be made for universal access.

It was affirming as a participant in this process to hear from others about the same policy hurdles I deal with every day in Congress, state legislatures, and regulatory bodies. My firm‘s public policy work, while mostly centered in the U.S., can be informed by policies that have been tried elsewhere with varying degrees of success. That the Global Agenda Council on the Future of Electricity could arrive at these principles and requirements should give us all a cogent road map to this transition. Read the full report here.

The omnibus deal—PATH (Protecting Americans from Tax Hikes Act of 2015)–was sausage-making at its most intense, but the product should be palatable for most parties in clean energy. Extensions for renewables and efficiency tax credits were key sweeteners to lifting the oil export ban. In addition, clean energy R&D funding, reauthorization and increased funding for the Land and Water Conservation Fund, and climate change funds (Clean Technology and Strategic Climate Funds of Bank for Reconstruction & Development and Global Environment Facility) were included in the deal. While the solar and wind credits are phase-downs, the trajectory should provide much-needed certainty to renewable energy investors, developers, and consumers and will serve as a bridge to implementation of the Clean Power Plan, the longer-term market driver for clean energy in the U.S.

House and Senate leaders—McConnell (supported by Chairman Hatch of Senate Finance), Reid, Ryan, and Pelosi—were key to ensuring that this deal could pass their caucuses, and the White House provided additional feedback throughout the process to ensure the President would sign the resulting package. Because of vociferous opposition to lifting the 40-year oil export ban, the environmental community for the most part had to sit this fight out. The renewable energy industries, in particular solar whose credit did not expire until the end of 2016, had to carry much of the water on the renewable energy extenders. New allies were made, especially in the Republican Caucus, that allowed for greater bipartisan support than has been seen in a number of years.

Now, the renewable energy industries can turn their focus to state and local policies, siting and permitting issues, and compliance strategies for the Clean Power Plan.

As the red-eye jet made its way toward the airport with dawn breaking, street lights still on and house lights coming on, I watched first the farms with long roads, then the small clusters of towns, then the vast suburban outreach of Washington, DC. I had been thinking a lot about the evolution of the electric grid. From above, one could see how electricity, whether urban or rural, connected all of these people and businesses into one enormous system, sometimes dense and sometimes sparse, but always on. Now the next generation of innovation is poised to change the way we think about and use this system.

Many of these innovations are more than just information flow—they are real energy resources like solar and energy storage, demand response, and energy efficiency—that affect both the operations and business of utilities. At a recent conference in Hawaii—a state that has been undergoing such tremendous and real-time alterations to their grid that I have likened it to changing the tires while the car is moving—state regulatory Commissioner Lorraine Akiba said, “The integrated grid of the future is one that requires strategic actions to realize the full value of central power and distributed energy resources.” [1]

Akiba touches the key here to the future of our utility model: integration. The term came up again at a recent energy storage conference in California when a utility representative said, “Our job is not to simply connect, but to integrate.” The integration will need to be both physical—which has always been the operating premise—but also digital. Moreover, this integration does not need to rely on a centralized system of power generation plants connected by long transmission lines, but rather can allow for disaggregation of flexible and distributed resources.

One case to watch is the New York REV proceeding[2] where utilities—already decoupled from generation—are being asked to become consumer-service platform providers. As the commission Chair Audrey Zibelman has said, “By fundamentally restructuring the way utilities and energy companies sell electricity, New York can maximize the utilization of resources, and reduce the need for new infrastructure through expanded demand management, energy efficiency, renewable energy, distributed generation, and energy storage programs.”[3] The key here will be whether the utilities will be able to perform all these services, operate their system, and remain cost-competitive at the same time.

Utilities that see this integration with disrupters as a business opportunity stand to benefit. As in the case of New York, utilities could start thinking of themselves as service providers or, at least, integrators. What the Federal Energy Regulatory Commission has done on the bulk-power side by allowing compensation for characteristics and services provided to the transmission side of the system, state regulators could do on the distribution grid by allowing compensation for a wider range of values.

Another potential construct–proposed in the REV proceeding with Jon Wellinghoff, former Chairman of the FERC and Jeff Cramer, one of my business partners—would be for distribution utilities to adopt what FERC put into place when it issued Orders 888 and 2000[4], enabling the creation of competitive wholesale markets and Independent System Operators. This would be a comparable system on the distribution side, or Independent Distribution System Operator (IDSO).[5] The IDSO would enable distributed energy resource integration, greater consumer choice and participation, and allow for a more efficient and transactive energy framework.

Yet another option might be that utilities and others could be compensated for increased efficiency, for decreased energy intensity, and for lower-carbon resources (especially as the EPA Clean Power Plan is finalized and states begin implementation). State RPSs already give utilities credit for renewables, and in decoupled constructs, utilities are given credit for efficiency programs. What could be new is a more holistic set of metrics—going beyond but not totally dissimilar from the Value of Solar model.[6] That new set of metrics could: take into consideration what we want out of our system; put rules in place to compensate for those services; incentivize entities to provide those services; and then allow all participants to compete to provide services. Utilities could be winners in that model, but so could consumers and innovators.

It would be helpful to have a national policy that sets goals and objectives for our electric grid that could be the basis for a new compensation model. But states can set their own policies, as California has, that drive innovation in resources that can help meet state goals. The impetus does not need to be limited to state leadership, either. Vision can come from utilities and innovators collaborating to offer a set of services that are presented to commissions and allow them to see (and compensate) myriad benefits of that integration.

To keep those lights on that dot the landscape, whether in clusters or singly, utilities can join forces with “disrupters” to ensure that everyone benefits from a cleaner and more efficient system. They key is to move beyond simple connection to integration.